Glossary · from the DESK dictionary
ETF
An exchange-traded fund that usually passively tracks an index or basket of securities.
In plain words
A way to invest in an entire market or sector with a single purchase, instead of picking individual stocks.
In more detail
ETFs are typically characterized by low costs, high transparency, and intraday tradability — unlike classic actively managed mutual funds, which trade only once a day.
Example
An S&P 500 ETF tracks the performance of the 500 largest US companies in a single security.
What it means for traders
One of the most important innovations in retail investing in recent decades, central to passive investing.
Common pitfalls
No capital protection — ETFs reflect market risk just like the underlying securities.
Related terms
Actively Managed ETF · Stock (Share) · Equity Index Fund · Authorized Participant (AP) · Bond ETF · Closed-End Fund · Creation/Redemption Mechanism · Emerging Market ETF · Exchange-Traded Note (ETN) · Exchange Traded Commodities (ETCs) · Exchange Traded Product (ETP) · Fixed Income ETF · Gold ETF · Mutual Fund · Net Asset Value (NAV) · SPDR (Standard & Poor's Depositary Receipt) · Tracking Error · World Equity Benchmark Series (WEBS, historical)
From the DESK dictionary. For information only, not investment advice.
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DESK is a research tool and not investment advice. Page generated: 2026-10-12.